Looking beyond Amazon — Retail on the other side

Damian Ortega — Cosmic Thing, 2002

How Alibaba deploys machine learning and AI.

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In what was evidently a catch up game Alibaba released the Tmall Genie two weeks ago. Tmall Genie is a voice assistant that helps Chinese users order from Alibaba’s shopping site, Tmall. It is priced at significantly lesser (approximately $74) than its other counterparts like Amazon Alexa and Google Home assistant but is currently only available in Mandarin. Another Alibaba offering, the AliCloud is the counterpart to AWS and generated $254 million in revenue the last quarter. That’s a far cry from AWS which reached $3.23 billion in the same quarter.

So is Alibaba simply a Chinese competitor that is always playing catch-up with Amazon?

No.

BCG

Chinese ecommerce developed in a very different environment compared to US markets. According to BCG analysis by 2020 mobile commerce will account for over 74% of online purchases in China as compared to an estimated 46% in the US. China already has a higher share of ecommerce in retail than many countries in the West because retail infrastructure wasn’t fully mature when the internet boom took place making it easier for ecommerce to grow.

So when looking at Alibaba it helps to keep in mind what while it is following Amazon’s footsteps in certain aspects it is also a formidable competitor that is diversifying in non-intuitive ways and in a radically different market environment.

AI for first-level medical diagnosis

China has an acute shortage of physicians with only an estimated 1.49 doctors available per 1000 people. Add to that the high population in rural areas and a huge portion of Chinese population is left without quick and timely access to healthcare.

To address this Alibaba Cloud released a suite of AI solutions called ET Medical Brain that aim to help tackle some of these issues and can act as virtual assistants to patients by doing first level diagnosis for various ailments.

It also launched the first AI service for medical diagnosis that’s called ‘Doctor You’ which does image based diagnosis of cancer.

The implications of AI in healthcare spillover directly to ecommerce. If AI can do first level diagnosis remotely then prescription drugs could be retailed online rather than just via pharmacies. Paired with face recognition and detection technology being pioneered by companies like Alipay (Alibaba’s payment platform) access to drugs could become much cheaper, easier and quicker.

Content and Commerce

While many companies and countries are just catching up to the marriage of content and commerce Alibaba is living the dream. It reportedly deploys a system called ‘E-commerce Brain’ that uses not just past purchase data but also a host of other online activities like content browsing, bookmarking and commenting in order to predict purchase behavior. Within the network of Alibaba product customers can be shown articles related to their previous purchase or recommended products on Taobao based on lifestyle articles they read.

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China’s unique digital story makes Alibaba’s data powerful because it allows data collection at an unprecedented scale and across a system of interconnected networks — including Taobao Headlines, Alipay, and video site Youku

Smarter Supply Chain

Unlike Amazon, Alibaba doesn’t sell its own products. It deploys solutions that help sellers to sell more such as the Ali Smart Supply Chain — which helps to forecast product demand for new products or popular products during promotional events. ASSC is also reported to have improved logistics by directing inventory to warehouses based on regional demand forecast during promotional events.

Alipay and the bets on AI

Cashless payments are the norm in China where services like WeChat and AliPay make mobile payments seamless. Ant Financial, the financial arm of Alibaba group operates with AI as a key focus. Recent initiatives include an AI-driven image recognition system which helps investigators of vehicle insurance claims to do their jobs faster by assessing damage in under 6 seconds — a task that human investigators can take over 6 minutes to complete.

Alipay uses machine learning extensively for data protection and fraud detection. This includes not just development but also deployment of the latest technology. Face++, a face-recognition technology recently mentioned by MIT Technology Reviewin its “10 Breakthrough Technologies on 2107” list, is used by Alipay for authenticating electronic payments via facial recognition.